Chetan@Techno-Derivative

Monday, 15 May 2017

India VIX today made a life time low of 8.83. Generally IVs follow inverse relationship with Nifty Index.

Previously India VIX had made low of 9.35 on 24th Nov 2014 with Nifty closed at 8530; now lets analyze the Nifty behaviour:

Nifty made high of 8627 on 4th Dec 2014 & then a low of 7961 on 17th Dec2014 i.e. in the span of 23 days after making IVs low of 9.35 Nifty witnessed correction of 7.7%.

Looking at the past trend & current scenario with IVs making newer lows indicates that IVs should give some throwback which in turn will give some selling pressure to the markets.

Also looking at the option concentration data, 9500 Calls seeing huge OI in May as well as June series suggesting strong hurdle zone. Nifty had been making higher high since last 6 consecutive months & a kind of consolidation with some selling at higher levels is quite probable.

To play the downwards move with limited risk, One should go with OTM Put Buy for June series. Being IVs are at lower levels option premiums are also on lower side which favours the Option buy trade.

Trade: Accumulate 9100 June Series Put@28-33; Upside Target Open for 100+

Wednesday, 22 March 2017

Relcapital is trading bullish with a gain of around 14% so far in this expiry. After sudden jump, it is seeing consolidation at higher levels. To play the next up move we can go with Ratio Spread Strategy:

View: The stock is likely to settle in the range of 620-680 in this expiry.

Monday, 6 March 2017

Markets are now hovering in a range & waiting for the next event of election results.

View: Post result if BJP comes or not with majority in UP will be key driver for the markets. A volatile move of 300 points is expected in either direction depending on the results. To play the volatile move, I recommend the following LONG STRANGLE strategy.

Action:

Buy 8600 March Put@22
Buy 9300 March Call@18

Total Premium Paid(Max Risk): 40
Reward: Theoretically unlimited.

For Traders: Keep Stop Loss of 10 & can expect target of 80-120 on total premium paid.

Any directional move of 200+ points will start generating good profits in this strategy.

Wednesday, 8 February 2017

After the RBI decision of rates unchanged, its time to take fresh view on markets & create option opportunity.

View: Nifty is overstretched and now chances of profit booking may arise at any point of time in the current series. To utilize and hedge the long portfolio once can go with following trade with downside bias:

Wednesday, 1 February 2017

After the much awaited Budget Event, now lets focus on stock specific opportunities.

Idea in the past 10 trading sessions has rallied more then 70% to the 115 zone. Participants who are Bullish for the stock & would like to buy if it comes again to a attractive lower level can have one Option Strategy. Traders who are least risk tackers can go with following Trade:

View: Stock looks to be ib Bulls grip, chances of correction from 110 to 80 zone(27%) in the current series is least probable. On extreme side if it comes to 80 level then it becomes good opportunity to BUY the stock. at that point of time 80 Put Option Sell trade will create losses but at the same time you are buying stock at very attractive buying levels.Action: Sell 80 Put@0.35; Lot Size: 7000; Premium Inflow: 2450/- per lotRisk: Below 79.65 levels only.Reward: 0.35 if settles above 80 zone in Feb Expiry.Holding Period: 21 daysInvestment: 2Lacs (assuming 25% margin blocked)Expected Profit: 2450Absolute Return: 1.22%( for 21 days)

Aggressive traders can go with further option sell in the premium range of 0.35-0.7, due to any fall in stock prices.